A Christian economist weighs in on the American health care debate

Formerly the terrain of policy wonks and ivory tower academics, the recent health care debate in the United States has aroused public interest and angst more than any domestic policy issue in recent memory. I personally have been intrigued by this debate, both as an American economist and as an American Christian, and both of these factors make me a strong advocate of health care reform. I believe that the U.S. needs a strong version of health care reform to make our economy more efficient and our society more just.

The debate over health care reform is a long and complicated one; here I wish to focus on a particular point made by its opponents. Because this point is so misleading, it gives me a nearly irresistible urge to sharpen my academic fangs and get into a loud and unpleasant argument.

The point of contention states that the government should stay out of health care—that any type of government intervention in the health sector represents a move toward an inefficient form of "socialized medicine." The core ideal that underlies these statements is many Americans' deep trust in the virtues of the free market.

As a general principle, I, along with nearly all mainstream economists, couldn't agree more. The free market is wonderful. For the majority of goods and services in our economy—food, computers, clothes, cell phones and so forth—the free market does one heck of a job of inducing producers to produce these things and providing consumers enough income to consume them.

What the average person doesn't understand is that the free market operates with this kind of stellar efficiency only under certain conditions—one of the most important of which is that the benefits and costs involved in economic exchange affect only the transacting parties. Along with this, people on both sides of a transaction must share equal information about the benefits of a product or service. When these conditions are absent, the rule of thumb of "the free market as provider" breaks down, often with egregious consequences.

In this regard, the health care market shares some of the unfortunate properties of financial markets: in both there is an inherent lack of transparency in economic transactions, and the consequences of market activity (or inactivity) spill over to others. Because of problems involving the asymmetry of information between borrowers and lenders, and the systemic risk involved with bank failures, economists have long understood about the need for regulation in the financial sector. Even fervent free-market proponents like Milton Friedman understood that you can't have a completely free market for loans. And after we deregulated our financial system in the 1990s, the result was a virtual financial meltdown, not increased efficiency in financial markets.

When politicians argue that government should stay out of the health care industry, they either have no idea what they are talking about, or they are deceiving people into accepting their position over a complicated issue that requires some level of expertise to understand. The fact is that there is not a single developed, industrialized country in which the government does not heavily intervene in the health care market, including the United States. Indeed, the only countries in which the government does not intervene in health care are very low-income developing countries in places like south Asia, Central America, and sub-Saharan Africa, and only then because they cannot afford to intervene.

In the United States, the government already provides free health care ("socialized medicine") directly to military servicemen, war veterans and native Americans, and has a "single payer" system called Medicare for people over 65. Moreover, politicians have found that these systems are so relatively popular with their users that it would be political suicide to try to curtail them. According to polls, war veterans quite like their American version of socialized medicine, and seniors will vote out of office anyone who attempts to monkey with their single-payer Medicare system.

Washington Post writer T.R. Reid, in his timely new book The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care (Penguin Press, 2009), documents his travels around the world with a bad shoulder. In the course of getting advice about his shoulder (which really isn't all that bad), he interviews doctors and patients in other rich countries about their health care systems. While no system is perfect, in every other industrialized country—virtually without exception—people are able to enjoy a generally higher level of health care than we do in America, with universal coverage, and at a far lower cost.

In Japan, for example, which spends 8.0 percent of its national income on healthcare (compared to 15.3 percent in the U.S.), Reid describes how the government regulates prices on medical drugs and procedures and requires everyone to buy insurance, but allows millions of private providers and thousands of private, non-profit insurers to compete with one another to provide health care and insurance to Japanese citizens. Japan has a life expectancy of nearly 79 years for men and 86 years for women, far higher than in the U.S., and they make many more trips to the doctor than Americans, with shorter waiting periods. Which country employs more government intervention in its health care system? It's hard to say—it's just that the intervening we are or aren't doing is done relatively poorly, compared to Japan.

In France, everyone carries a carte vitalle, a card with an embedded computer chip that gives a patient's complete medical record and set of billing statements to any doctor in the country when swiped in a small reading machine at the doctor's office. There are no aging, color-coded manila folders on the shelves of doctors' offices in France; everything is on the carte vitalle. It turns out that a tremendous amount is saved in the French system just with this simple use of technology.

Furthermore, nobody in France goes untreated. Everyone must belong to a health insurance fund, and most people have their insurance through their work, just like in the United States. The quality of health care is outstanding, rated #1 in the world by the World Health Organization, and waiting lines for procedures are no longer than they are in the United States. There is complete freedom for patients to see any doctor or specialist in the country without any of the kinds of restrictions imposed on our freedom by U.S. insurance companies. The French are able to buy what is rated by the experts as the best system in the world at only 11.1 percent of their national income, far less than we pay for ours.

Reid's book describes health care systems in many other countries: Britain, Canada, Germany and others, and they all seem to get a better bang for their health-care buck than we do. The question one has after reading the book is this: how in the world can we support a system that is simultaneously so inefficient and so unjust? (One would think that at least if our system was unjust, at least it could be efficient, or vice versa.) And as Christians, how can we support such a deplorable system that, on top of wasting the nation's resources and rendering our firms less competitive, denies people healthcare for pre-existing conditions, uses legal technicalities to drop sick patients from insurance rolls, and forces some families into bankruptcy to pay for medical bills from unavoidable illness?

Christians clearly understand the heart of Christ for those who are the victim of unfortunate mishap from his parable of the Good Samaritan (Luke 10). So is it even an arguable point that medical care must be prioritized for those who need it through no fault of their own? Based on what we understand about gospel values, and understanding the myriad better alternatives to our own system, what keeps us as Christians from leading the charge for change?

I would submit that there are several negative factors at work. The first may simply be the ugliness of pride. Americans like to think of themselves as doing things the right way, as innovators, not followers. And this is often true. But even when it appears that the U.S. has developed an inferior approach, we Americans tend to be stubborn and resistant to change, seemingly on patriotic grounds. We like to think of ourselves as doing things the right way, not learning about the right way from the French.

The second factor is the vested interests in the current system. Bad outcomes can remain entrenched when what economists call "economic rents" are created that are then used to buy resistance to policy change in the political system. This is a well-understood phenomenon that frequently happens in trade protectionism, government contracts, and government regulation. A vicious cycle occurs where policy creates concentrated economic wealth, which then by virtue of that wealth is able to manipulate the political system to keep the taps flowing. Health insurers, pharmaceutical firms and doctors prosper greatly under the current system in the U.S. relative to other economically advanced countries. We should be wary of their resistance to change; there is a conflict of interest.

A third factor is the spiritual laziness that affects all of us in different ways. The vast majority of evangelicals in the United States probably have fairly good health care. After all, the quality of care is very good if you are in the system and don't have to pay your own medical bills. It is some other family that has lost their house and had to declare bankruptcy because a health insurance company dropped their child with a brain tumor from coverage. For suburban Americans, the nearly 50 million uninsured are invisible, and their plight doesn't capture the attention or pique the emotions very much. The large firm that employs us covers most of the share for our premiums, and the quality of our own healthcare is fine. We don't fight against injustice and a dysfunctional system because it doesn't affect us. We can be spiritually lazy.

There is no good excuse for American evangelicals to be on the sidelines of health care reform. The economic arguments against it are weak, and the moral imperative in favor of it is much too strong.

BruceWydick is Professor of Economics at the University of San Francisco. His research focuses on applications of game theory and econometric methods to understanding poverty and social issues. He is chairman of the elder board at Berkeley Covenant Church and co-founder of Mayan Partners, a Christian organization that works with education, health and development in the Mayan highlands of Guatemala. He is married and lives in Berkeley with his wife, Leanne and their precocious 5-year-old daughter Allie.